1. Slinging Pot
(In 2010, Gabriel Greenstein and Robert Johnson co-founded TetraLabs and brought the first in history distilled THC oil, and THC softgel capsules to market in San Jose, CA.)
People who think they know everything are a great annoyance to those of us who do.
Difficult Customers
From dealing with the Russian and Armenian gangsters in the early days of medical cannabis dispensaries in Los Angeles to his current white-label customers, Bob has seen his share of eccentric, offensive, and in some cases dangerously psychotic and demented customers.
Some people have no self-awareness at all to realize how blatantly they’re wasting your time and contradicting themselves. Sometimes it feels to Bob like they’re walking up to you and kicking you in the shin and smiling the whole time.
Just recently when a customer told Bob that they urgently needed a white label CBD order, Bob’s team went to the trouble to get everything ready, based on the customer’s word that they were committed to the order. Sure enough though, when it was time to pay the deposit, this customer was nowhere to be found, and Bob couldn’t get a hold of him.
Bob sent him a professional email following up and asking him about the deposit.
The response that Bob finally got from his would-be client, a week later, was that the customer was leaving for a chanting retreat and couldn’t be reached for over three days because he would be busy chanting.
One lesson that Bob’s learned is that life, is that is too short to work with terrible people, even if they’re paying you.
How do you beat the odds to get to market?
I think we're going to the moon because it's in the nature of the human being to face challenges. It's by the nature of his deep inner soul... we're required to do these things just as salmon swim upstream.
To just about everyone who goes into any business, the dream of hitting the big time can be an irresistible allure. In the case of CBD brands that pipe-dream would translate into a huge growth in sales, customer acquisition, brand awareness, and consumer credibility. The venues outside of the internet that still offer the greatest potential for consumer traffic are still traditional, as well as non-traditional, retail spaces.
Just Walmart, Target, CVS, and Walgreens alone have over 25,000 retail locations in the US. Imagine what that could mean for your revenue? What sane CBD company wouldn’t be interested in selling their products into Kroger, Home Depot, or Costco?
While many of these chains won’t carry CBD yet because of the high theft rate, an education curve that requires special training, prohibitively high MSRPs (manufacturer’s suggested retail price), and in some cases concerns with so-called unclear Federal law as detailed previously, there are a number that do today and will play in the category.
That being said, just because you can go into business with them, doesn’t mean that you should!
Dealing with a big retail chain can bankrupt a company. They’ll ask you for term sheets a mile long, demanding discounts and rebates for losses and theft, promotions and discounts, storage and slotting. The list goes on and on.
Walmart eats start-up companies for breakfast. This is not a safe environment for a small business, the faint of heart, or especially not the faint of wallet.
After demanding free products, ‘pre-fills’, promotional rebates, and blah, blah, blah, etc., and you’re all in on net terms with your grocery chain, your overpriced products will still need to sell, or even after you’ve invested all that money upfront, the retailer will immediately drop you like a burlap sack full of osmium-cube paperweights.
Speaking of overpriced, in many cases, CBD tinctures and other products have a retail MSRP above $100!!! With prices this outrageous, products this expensive aren’t a fair value proposition compared to most other CPG (Consumer Packaged Goods) products. Worse yet, this isn’t even the result of expensive input or overhead costs, but instead can be distilled down to pure greed, and sky-high mark-ups!
In many cases, for instance, brands are buying cheap products like tinctures from white label manufacturers for as little as $2-$5, and then reselling them with their own labels for $75-$150!!!
Due to their insane cost, many CBD products are getting priced out of the market with various demographics of consumers and in many retail channels including the C-Store Channel (convenience and gas station) Value Channel (including Dollar Store, Dollar General, Dollar, etc.), and much of the Grocery and Drug Channels. The Mass Channel including Target and Walmart, and the Club Channel including Costco and BJ’s don’t carry CBD products yet.
Additionally, because products are so small and so expensive, these ‘high-ring’ SKUs are a huge target for theft from both customers and employees.
Cannaballers, helps advise brands on innovative ways to get to market, while helping them to navigate around the pitfalls of CPG and retail.
One way that we have brands to get into the hands of customers is by guiding them to develop products with a lower price point that are ‘trial sized’. Instead of selling a 4 oz balm that retails for $48, sell a 2oz balm for $25, to make your product approachable, and drive trial and consumer adoption.
In the current climate, if retailers choose to carry CBD products, they are limited in their options for merchandising between the ‘bad’ and the ‘ugly’, with an unfortunate lack of the ‘good’ on the menu.
For instance, in the Grocery and Drug Channels, there have been a number of disastrous CBD product launches by CVS, RiteAid, Fresh Thyme, Whole Foods, and Publix just to name a few! Many retailers that got into CBD changed their minds because they got robbed blind or couldn’t make sales.
This is because if retailers leave the CBD products sitting out on the shelf, they’ll get stolen. Retailers that took this approach have reported to Melissa and her retailer broker team at Cannaballers that they’ve experienced ‘shrink’ (theft) as high as 40-50% of CBD products they’ve merchandised out on the shelf.
The other terrible pill to swallow on the other end of the spectrum is merchandising the products behind a locked glass case behind the customer service desk alongside the razor blades in the area of the store that we call, the SPD or ‘Sales Prevention Department’.
Other brands have tried free-standing displays and PDQ (Pretty Darn Quick) shippers that can merchandise products at an endcap, along an aisle, or can stand alone at the center or the front of the store and feature the branding of the manufacturer or retail outlet.
These displays however do not by and large offer any additional protection against shrink.
One of the best places to merchandise generally speaking in today’s landscape, especially for smaller sized, (remember trial size!) SKUs (stock keeping unit), is hanging up on a clip somewhere near the POS (Point of Sale). As far as theft is concerned, at least being closer to the register, there are more eyeballs around to help prevent theft from occurring.
So how do you stand out from all of the other a**holes out there trying to sell similar products?
Always remember that you are absolutely unique. Just like everyone else.
Having managed sales efforts as a producer/processor in both Washington State and DC (BTW is anyone else getting the sense that Troy might be strangely obsessed with George Washington?) Troy learned that the key thing to successfully selling into cannabis dispensaries is to first, do in person reconnaissance. This is critical in order to learn about your target customer, what their needs are, likes & dislikes, etc., while beginning to build a personal relationship.
“Go out there and visit with them,” Troy says, “stop in and buy some product and strike up a conversation with the budtender.”
A talkative budtender can be a key source of business intelligence and might potentially spill the beans about everything you need to know and then some in order to deal with the store buyer or management. The interaction will also give you a sense of the character of your prospective customer. If you want to succeed in business, you should always endeavor to understand and add value for your audience.
“Don’t just be a menu,” Troy added, “listen to what they want and be a collaborative partner.”
Remember that whatever you are offering them, needs to be a solution for a problem that they have, or otherwise you’re just wasting their time.
Well, What About Bribes? Does That Work?
It is essential to seek out enemy agents who have come to conduct espionage against you and to bribe them to serve you.
I mean, who doesn’t like a good bribe? From Troy’s experience it can never hurt to come armed to his sales calls with a customer’s preferred snack. Of course, you need to do your homework here and try to figure out the best snack to bring, because if you miscalculate, this charm offensive could possibly backfire. For instance, if you brought a box of donuts or a pizza to most stores when you dropped off product samples, the employees at those places would probably love you, but not at the store where all of the employees are a bunch of skinny b**chs on Keto. In that case you would just be taunting them by tempting them with a dangerous spike in blood glucose.
Or as Troy puts it, “don’t bring butter cookies to a bunch of gluten-free vegans.”
Develop a winning Go-To-Market Strategy, and Sales Game Plan with the help of the industry Gurus at My Pipe Dreams.
Key Chapter Takeaways
The Do’s and Don’ts of the Dope Industry
- Do– Remember the customer is always right, except when they’re a psychotic d**chebag!
- Do– Get to know, understand and build a personal relationship with your customers.
- Do– Bring non-offensive snack foods or offerings if allowed by law.
- Don’t– Try to get your product into Walmart.
- Don’t– Forget to look for novel merchandising and POS solutions.
- Don’t– Try to grow too fast!